Westpac highlight that "the RBA........>

AUSSIE BONDS: Westpac highlight that "the RBA noted that "in Australia,

money-mkt rates are higher than they were at the start of the year, although

they have declined somewhat since the end of Jun. These higher money-mkt rates

have not fed through into higher interest rates on retail deposits. Some lenders

have increased mortgage rates by small amounts, although the avg. mortgage rate

paid is lower than a year ago." That is consistent with their recent commentary

& would suggest that at the moment they are content to observe the evolution of

what we see as a structural change in the supply of & demand for, AUD money mkt

funding rather than respond to it in any way. With that in mind, we await

Friday's SoMP with keen interest."

- With regards to Bond futures Westpac suggest that "with the RBA confirming the

well-held consensus of unchanged policy for the foreseeable future, we would not

expect a major revaluation of AU bonds outside of their recent trading ranges.

The most vulnerable part of the curve would be the 10-Year maturity, where the

97.25 level is an important technical support and could be influenced by any

near term U.S. 10-Year yield rises over coming days."